Dave Ramsey: EE bond dilemma

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Sep 4, 2018 at 11:26 AMSep 4, 2018 at 11:26 AM

Dear Dave,

I have about $36,000 in debt, not including my house. Of that amount, $30,000 is a truck that’s worth about what I owe on it, and the other $6,000 is student loan debt. I make $50,000 a year. I also have 24 EE bonds that were gifted to me that haven’t fully matured. Right now, they’re worth a combined $12,500. Should I cash those in, and use the money to pay off some of my debt, or let them fully mature before cashing them in? Also, are there any tax ramifications from cashing them in?

— Patrick

Dear Patrick,

They might be taxed, but it won’t be much to worry about. EE bonds make less than one percent, so you haven’t really earned much. Never buy those things, man. They’re a horrible investment, with an even worse rate of return.

I’m glad you’re working out a plan and moving toward getting out of debt. A $30,000 truck doesn’t work with a $50,000 income. So, cash in the bonds immediately, sell the truck, and use some of the money from the EE bonds to pay off the school loans. Then, find yourself a cheap, little truck that will get you around for a few years.

You can do this, Patrick. I want you to have a nice truck one day, but I don’t want that truck to be a burden. This one’s got you by the throat, and you’re feeling it, aren’t you?

Drive like no one else for a little while now, so that later you can really drive like no one else.

— Dave

ID theft protection in the baby steps?

Dear Dave,

Where in the Baby Steps does identity theft protection fall? Should we cover the kids, too, or only the adults in our household?

— Laura

Dear Laura,

Everyone needs identity theft protection. Unless you’re one of these folks who have gone completely off the grid, someone out there probably has a few of your numbers. Between sloppiness on the part of consumers, and the massive data breaches that have occurred in the last few years, almost everyone has experienced, or will experience, some sort of identity theft. Unfortunately, this is today’s world.

I don’t really consider identity theft protection part of the Baby Steps. It’s like life insurance or car insurance, in that it’s something almost everyone needs. Things like that should just be part of your budget every month.

— Dave

— Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 14 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.